Riley: Donald Trump Involved With Ponzi Scheme Criminals?

Tuesday, December 20, 2016


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Was President-elect Donald Trump Involved with Ponzi Scheme criminals? Did Mr. Trump recommend that the perpetrator of the scheme, also loosely tied to Rhode Island, was qualified for US Attorney General or even President of the United States? 

Sometimes I feel like an investigative journalist Is living inside of me, just waiting to bust out. I see all kinds of malfeasance among the politically powerful and it makes my skin crawl. I have always hated the abuse of power. This passion started developed in New York about unscrupulous floor traders and really accelerated when I moved to Rhode Island.  Due to a series of events deeply affecting my life and psyche I ended up moving my family to Rhode Island in 2003 for an unexpected forced retirement. The PTSD that I still suffer from, because of the World Trade Center attacks, made it impossible to stay in NY.  It made me angry, hypersensitive and volatile. 

Probably too sensitive for any kind of work and definitely too sensitive for working on Wall Street I evolved to managing money in Rhode Island. I've always had a Spidey sense for fraudsters and I am constantly on the lookout for scams. I knew Bernie Madoff and the hair stood up on the back of my neck when I met him. As one of the early few who questioned his returns, I still couldn’t figure out how to short him. In Rhode Island I tracked down how it was possible that average intelligence mortgage brokers in Rhode Island and across the country were making so much money in 2006 and how they operated, After looking into this I was one of the guys who executed the “big short”. 

My growing sense was that Rhode Island, for whatever reason, was the land of scams and make believe and connected to an amazing amount of criminal behavior. So now, nearly every time I see scams or strange financial misbehavior I can tie it back to Rhode Island. Today Platinum Partners hedge fund and founders were indicted for a $1.3 billion fraud /Ponzi scheme. 

The names proffered in the indictment of Platinum Partners were familiar to me and it did not take long to tie these names back to another Fraudster named Scott Rothstein, currently serving 50 years. Rothstein owned two properties in Narragansett that ended up as part of a victim fund. You may even know one of the dozens who also went to jail.

The Testimony

Scott is also the guy I am referring to above as Donald Trump's recommendation for President. Below is the testimony of a co-conspirator Steve Caputi:

Rothstein is now serving a 50-year prison sentence and Caputi was sentenced to five years on a fraud charge. 

The homemade video shows billion-dollar Ponzi criminal Scott Rothstein sitting in the back of a limousine on his way to Yankee Stadium, a glass of vodka in his hand, lecturing to several children -- relatives and family friends -- who are attending the baseball game with him.

"Here's one thing you should learn about me that's really important, everybody pays attention," Rothstein said. "If you are going to attack me in any fashion, be prepared for the counter-attack and understand that I duel with people much much smarter than you every day. Understand that the repercussions of engaging me could open the gates of hell. Understand that I am capable of evil far beyond anything your imagination could ever conjure up."

A voice from behind the camera pipes up: "I can verify this as actual fact."

The voice is that of Steve Caputi, a partner with Rothstein in the Café Iguana nightclub in Pembroke Pines and one of his closest friends

"He said, 'Listen, Trump operates the same way, the politicians operate the same way, when there's a problem you fix it," he said. "Sometimes you go outside the rules. Everybody does it, that's how it's done. That's how you get to the top."

And Caputi rode along as Rothstein's meteoric rise began until both of them were hobnobbing with Donald Trump at his Mar-A-Lago estate. He said Trump was one of Rothstein's idols and Trump returned the respect in a big way one night at an event at the lavish Palm Beach spread.

"Donald Trump puts his arm around Scott and says, 'You know, people you're looking at probably the next United States Attorney General,'" Caputi said. "And Scott's trying to look all modest, and Arlen Specter chirps in and says, 'Maybe someday a president of the United States.' And the whole room explodes with applause like the floor of a convention."

Then there is the connection with NY Mayor de Blasio.

So let’s get to it all you real investigative reporters.  Follow the money.

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Michael G. Riley is vice chair at Rhode Island Center for Freedom and Prosperity, and is managing member and founder of Coastal Management Group, LLC. Riley has 35 years of experience in the financial industry, having managed divisions of PaineWebber, LETCO, and TD Securities (TD Bank). He has been quoted in Barron’s, Wall Street Transcript, NY Post, and various other print media and also appeared on NBC News, Yahoo TV, and CNBC.


Related Slideshow: Trump’s Win - What Does it Mean for Rhode Island?

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Jennifer Duffy

Cook Report

"We don't really know what a Trump presidency means for the nation, never mind the smallest state.  One of the unintended consequences of last night's results is that Sen. Jack Reed won't be chairman of the Senate Armed Services Committee.  Chalk that up as a loss for RI."

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Pam Gencarella

Head of Ocean State Taxpayers' Association

"Trump’s win means that his signature issue, illegal immigration, could have a big impact on RI, hopefully reversing our course as a sanctuary state and saving the state taxpayer millions of dollars.  While we agree with his 'repeal and replace' Obamacare stance, we have no idea what that means to the RI debacle known as UHIP.  It is not a stretch to believe that federal funding for this kind of system will be off the table so, will RI be stuck with this massively expensive system that still doesn’t work and that is expected to cost another $124 million to fix?  

Trump's belief that there is significant fraud in the Food Stamp program and the policies that may come from that belief could have a negative impact on RI's local economy since there are businesses in certain cities that rely heavily on this program, fraud and all. On the upside, we may be able to ditch the UHIP program if there is significantly less need for processing welfare program requests (ie. Medicaid and food stamps) resulting from fewer illegal immigrants and less fraud.  While we are ambivalent about his touted child care policies, if enacted, it may force our legislators to revisit the ever growing state cost of subsidies in this area and possibly reduce the fraud and abuse in this system." 

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Kay Israel

Professor at Rhode Island College

"With a Republican President and Congress, Rhode Island will probably be excluded from the 'fruits of victory."  

The congressional delegation will be able to vocally make their presence felt, but in the long term it's more symbolic than substantive.  

For Rhode Island it's a matter of holding on and waiting until '18 or '20 and a surge in Democratic influence."

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Jennifer Lawless

Professor at American University

"The RI congressional delegation just became even less powerful than it was. With unified government, Trump doesn’t need to quell Democrats’ concerns or acquiesce because he’s worried about a Democratically-controlled Senate.

His appointments will reflect that. His executive orders will affect that. And the conservative policy agenda he puts forward will affect that."

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Len Lardaro

Professor at University of Rhode Island

"Well there's a few things -- because there's not going to be gridlock, that's a big difference if it had been Hillary and a GOP Congress, in which nothing would got done. We'll at least get a half a billion in infrastructure that's going to pass which will have an impact.

I think you'll see there will be reduced reliance on government nationally -- and that's where we'll stick out like sore thumb. We've relied way too much on government -- and our government is highly inefficient and ineffective.  Maybe, just maybe, in this who cycle of things we might be forced to be small and more efficient for once.

A couple of other things -- interest rates jumped. The one to follow is the ten year government bond rate -- which is tied to mortgages. It went from 1.7% to 2.05% in one day. The point is -- if the ten year stays high, mortgage rates will start going higher -- and in the short time people will run to re-finance. 

That's the short term impact -- but then if rates stay hight, that will make mortgages more out of reach. And we just passed a bond issue to limit open space -- housing has limited upside here.
The next thing -- the Fed Reserve will go ahead with tightening next month. A strong dollar will hurt manufacturing. When the dollar is strong our exports become more expensive overseas. 

Our goods production sector -- manufacturing and construction -- in the near term will do a little better, but as time goes on will be more limited. But something you won't hear, is there are lags in fiscal policy, of six months to year. So we won't really see the effects until the third our fourth quarter of 2017, going into 2018."

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Mike Stenhouse

RI Center for Freedon and Prosperity

"As the unbelievable turned into reality this morning, it struck me that the presidential election was not really all about Donald Trump and Hillary Clinton. It was about a fed-up people, revolting against a corrupt system - the "beast" - that relentlessly favors insiders. Hillary personified the beast, while Donald personified the slayer.

Sadly, based on election results in our state, Rhode Island's version of the beast lives on. I fear our political class has not learned the lessons from the Bernie Sanders and Donald Trump movements - and will continue with their government-centric, anti-family, anti-business status quo."

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Kristina Contreras Fox

VP of Young Democrats of America

"A Trump Presidency means the validation of the ugliest part of America. In RI, as with the rest of the country, the hammer of his hatred will fall hardest on minority communities. Being a blue state doesn't make us immune from this danger.

Trump won over 35% (39.5) of the vote here! We need to look in the mirror, and not lie about what the reflection shows us. No more hiding underneath a blue blanket. I expect those who claim Democratic values to be true to those values. The gulf between words and actions have turned into fertile ground for Trump's message to grow here in RI. If you call yourself a Democrat, if you claim to stand in opposition to Trump, now is the time to prove it. Show up and fight back."


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